a way that simple incarceration never could. By relentlessly focusing on the profitability of crime, it is an enforcement tool that keeps pace with evermore well-financed and internationalized criminal groups.

It is an enforcement tool with notable interrelated benefits. It pays for its own property management costs and relieves additional burdens that otherwise would fall to our law abiding citizens and taxpayers. It strengthens law enforcement by rechanneling forfeited value back into this most fundamental societal purpose. It promotes cooperation among federal, state and local police around the country through our ability to equitably share forfeited assets with those who have assisted in our investigations. It allows for victim restitution by permitting us to return the forfeited assets of criminals to those who were once their prey. Under the Weed and Seed Program, it turns tainted properties back to constructive community use. It even sanctions the donation of forfeited assets to charitable organizations and the transfer of forfeited monies to support our national effort to reduce the demand for illegal drugs.

In just a few very specific examples, the canine and handler teams detecting firearms and explosives for the Bureau of Alcohol, Tobacco and Firearms, the enhanced security presence at this summer's Olympic Games in Atlanta and the anti-drug and violence presentations to elementary schoolchildren by police officers in California's Orange County, would not be as far along as they are today were it not for the support of federal forfeiture programs.

We have arrived at this point through a reflective and measured expansion of forfeiture authorities, always guided by the fundamental belief that the strength of federal forfeiture rests directly upon public confidence in the program's integrity. While we appreciate the intent of H.R. 1916 to safeguard that integrity, we have significant reservations about how this bill would adversely impact today's federal forfeiture activities.

The principal provisions of H.R. 1916 would amend several sections of the Tariff Act of 1930, codified in Title 19 USC, to:

place the burden of proof on the United States in a civil forfeiture action;

raise the standard of proof from probable cause to clear and convincing in a civil forfeiture action;

eliminate the need to file a cost bond to have a claim of interest in property determined in a civil judicial proceeding;

provide for appointment of counsel in a civil forfeiture action when a claimant cannot afford that representation;

provide for the release of seized property prior to forfeiture if the seizure causes substantial hardship on a claimant; and,

provide for a cause of action to require the release of property pending the completion of the forfeiture proceeding.

In addition, the bill would amend Title 18 to provide for the Department of Justice to pay for the compensation awarded by the courts for representation of claimants.

Collectively, these provisions of H.R. 1916 present three problems that detract significantly from the bill's intended reform purposes.

First, Title 19 is a commercial statute designed to facilitate trade, expedite the collection of fines, penalties and import duties, prohibit the introduction of contraband items into the United States, protect intellectual property rights as well as the public health and safety. The changes proposed by H.R. 1916 would compromise the ability of the United States Customs Service to fulfill these vital responsibilities. Think about the message the United States would be sending to its trading partners if, at our borders, Customs officials could no longer seize and retain the sizable quantities of pirated products that steal from the inventiveness and creativity of American workers. Indeed, in those. instances where the detention of property serves as an appropriate substitute for a lien, the ability of the Secretary of the Treasury to collect customs revenues could be impaired.

Second, it is our belief that H.R. 1916 would greatly increase the number of cases on an already crowded docket of the federal courts. Waiver of the cost bond, coupled with the appointment and compensation of counsel, would serve to encourage litigation of even the most plainly forfeitable property interests.

Third, H.R. 1916 will make it more difficult for the United States to deprive criminal violators of their ill-gotten proceeds. Generally, it will make it more difficult to detain property-at the border. Releasing proper pending completion of the forfeiture appears contrary to the very aims of current forfeiture law.

As drafted, the provisions of H.R. 1916 may have a substantial impact on the federal government's ability to detain dangerous food products, adulterated or unlicensed drugs, child pornography, illegal firearms and unsafe consumer products at the border. It would compromise our ability to protect intellectual property rights

and endanger a portion of customs revenues. Finally, federal courts' caseloads and law enforcement's ability to deprive individuals of the proceeds of their illegal activity would be impacted significantly.

We value the reasoned progress that the Congress and law enforcement have made in the last twelve years in the application of forfeiture authorities. We share the concerns of our colleagues at the Department of Justice and of you, Mr. Chairman, that forfeiture law can and should be further refined to better ensure its recognition of basic protections afforded property rights. We believe, however, that H.R. 1916 is wide of the mark in achieving the appropriate balance between individual property rights and the enforcement of our civil and criminal forfeiture statutes. Alternatively, we commend for your consideration the bill presented by the Administration, the provisions of which have just been highlighted by my associate at the Department of Justice and, most importantly, achieve the requisite balance. We have worked closely in the crafting of the Administration's bill and it contains several sections that broaden and enhance Treasury law enforcement authorities while supporting a common goal of better protecting rights to property.

Perhaps because of its imposing power-a power not simply to incarcerate criminals but to take down their organizations forfeiture today is all too often the subject of negative media coverage. Where federal forfeiture is involved, we accept the challenge to right the wrongs that may be done but such incidents should not obscure the many positive aspects of this formidable law enforcement mechanism.

The Department of the Treasury has been entrusted with significant forfeiture authority for over two hundred years. We have exercised this authority in the pursuit of various illegal activities that threaten the safety, security and prosperity of the American people. Forfeiture is a legitimate authority bestowed by the citizens of the United States upon federal law enforcement. Our obligation, then and now, is to make proper use of it so that it may realize its most fundamental purpose of protecting the law abiding. We look forward to bringing Treasury's forfeiture background to bear in working together with the Committee to strike a desire able well-balanced reform.

Mr. Chairman, this concludes my opening statement. I will be pleased to answer any questions you or the other members of the committee may have at this time. Thank you.

Mr. HYDE. Mr. McMahon.

STATEMENT OF JAMES W. MCMAHON, SUPERINTENDENT, NEW YORK SATE POLICE, ON BEHALF OF THE INTERNATIONAL ASSOCIATION OF CHIEFS OF POLICE

Mr. MCMAHON. Chairman Hyde, and members of the committee, I want to thank you for allowing me to testify on proposed reforms to the Federal asset forfeiture statutes today.

I am here representing the International Association of Chiefs of Police, an organization of over 16,000 police executives, and as Superintendent of the New York State Police, a large full-service enforcement agency.

All too often in law enforcement, we see the criminals who defy our laws flaunt their illicit profits in material ways. They prey on our society, reaping rewards from their drug trade.

The New York State Police, along with county and local agencies view asset seizure as an effective tool to mitigate the spread of illicit narcotics by attacking the core of the narcotics trade, its illicit profits. By bringing this money back to law enforcement, we are able to dedicate it to further our efforts against narcotics and the violence it all too often fuels.

The forfeiture law permits the seizure of the currency and real property of the criminal. This channels millions of dollars back to the law enforcement agencies involved.

In New York State, we have been able to equip our personnel with necessary equipment, such as semiautomatic weapons in an effort to bring our officers more in line with the weaponry, and un

fortunately, firepower used by the drug traffickers they often have to face daily on the streets of our society.

Most recently, the asset seizures have enabled us to construct a state-of-the-art forensic center, a center capable of the latest technologies and scientific procedures, including DNA, drug-testing serology and other important areas of criminal investigations. The forensic center, a $25 million building has been paid for by illicit profits from the drug dealers and the violent criminals it will be used to analyze forensic evidence against.

It will be a center that will benefit all of us in law enforcement in New York State, for over 50 percent of the cases handled by our forensic center come from county and local enforcement agencies. In these economic times we would not have been able, without the benefit of seized assets that we seize from the criminals in the drug trade, to build this building.

Asset forfeiture is, without a doubt, a useful tool to law enforcement. We have been able to remove from criminals the proceeds of their illegal activities as well as the instrumentality they have used in committing their crimes.

Most forfeiture cases in which the New York State Police are involved are drug cases. In these cases, simply taking the drugs is not sufficient. The illegal drugs themselves have no use to the lawabiding citizen. Their only purpose is to be sold to drug users. To disrupt the drug organizations, law enforcement needs to remove the profits generated by drug dealing as well as vehicles and real properties used in trafficking and/or acquired with illicit profits.

There have been media stories of alleged abuses. And even some recent court decisions indicating a needs for reform. The IACP and other law enforcement groups have been meeting for more than 2 years with representatives from the Department of Justice to consider where reforms should be made both to adequately protect the rights of property owners and to provide law enforcement agencies with more and better forfeiture tools to combat crime.

What we do not want reforms to do is to make forfeiture under Federal law more complicated, cumbersome, lengthy and costly, nor do we want it to take away from law enforcement the funds it needs to effectively enforce the narcotics laws.

Mr. Chairman, your bill, H.R. 1916, may be a good starting place on asset forfeiture reform. Many of the provisions in the bill State and local law enforcement agencies could and do accept in concept. But they would ask that modifications be made. In a moment I will deal with the actual provisions in H.R. 1916.

I would like to first point out that there is a strong need to address the many inconsistencies and ambiguities that have arisen in the forfeiture law. There is also a need to extend forfeiture into other areas of law such as white-collar crime, terrorism and consumer fraud.

If we are to consider reform, the IACP would prefer not to limit the task. H.R. 1916 is not legislation that States or local law enforcement would object to. An amendment to the Federal Tort Claims Act, similar to that in section 2, would limit the law enforcement exception to tort liability. This would ensure that innocent property owners are afforded a remedy when their property is damaged in the course of a forfeiture action.

Similarly, IACP does not object to the extension of the time period for filing a challenge for a forfeiture contained in section 3. Of more concern is the changing of the burden of proof contained in section 4.

As drafted, the bill would shift the burden of proof to the government and raise the standard of proof to clear and convincing evidence. While law enforcement has been reluctant in the past to shift the burden to the Government from the property owner, after showing a probable cause by the Government we can see how this change would make the entire process appear more fair.

We are troubled, however, by the elevation of the standard and would argue that the proper test should still be the preponderance of the evidence, the traditional civil burden of proof. This seems fair to us in law enforcement, for most forfeitures are civil proceedings.

Mr. HYDE. Let me say I tend to agree with you. I think I have no problem with the burden of proof being less than clear and convincing, but preponderance, and we will make that change.

Mr. MCMAHON. We appreciate that.

Mr. HYDE. You have already won one.

Mr. MCMAHON. I think we have already given two to you, Mr. Chairman.

My last one, under section 6, which deals with the return of assets to property owners during the forfeiture proceedings, commonly referred to as hardship return. The IACP would recommend that this remedy be reserved for circumstances where the property owner can establish likelihood of success on the merits.

With that, Mr. Chairman, I want to thank you on behalf of all of us in law enforcement for the opportunity to be here today. Mr. HYDE. I thank you.

[The prepared statement of Mr. McMahon follows:]

PREPARED STATEMENT OF JAMES W. MCMAHON, SUPERINTENDENT, NEW YORK STATE POLICE, ON Behalf of the INTERNATIONAL ASSOCIATION OF CHIEFS OF POLICE Chairman Hyde and members of the Committee. Thank you for inviting me here today to testify on proposed reforms to the Federal Asset Forfeiture Statutes.

First, I want to indicate how useful a tool asset forfeiture is to law enforcement. We have been able to remove from criminals, the proceeds of their illegal activities, as well as the instrumentality they have used in committing their crimes. Most forfeiture cases in which the New York State Police is involved, are drug cases. In these cases, simply taking the drugs is not sufficient. The illegal drugs themselves have no use other than to be sold to users on the streets. The drugs are impure and contaminated, and they can be replaced by the distribution chain. To disrupt the organization, law enforcement needs to remove the cash generated by drug dealing, as well as vehicles and real property used in the trafficking.

There have been media stories of alleged abuses, and even some recent court decisions indicating a need for reform. The IACP and other law enforcement groups have been meeting for more than two years to consider where reforms should be made-both to adequately protect the rights of property owners, and to provide law enforcement agencies with more and better forfeiture tools to combat crime. What we do not want reforms to do, is to make forfeiture under federal law more complicated, cumbersome, lengthy, and costly.

Mr. Chairman, your bill, H.R. 1916, may be a good starting place for the debate on asset forfeiture reform. Many of the provisions in the bill, state and local law enforcement agencies could accept in concept, though not in the form as currently drafted. In a moment, I will deal with the actual provisions in H.R. 1916, but I would like to point out that there is nothing in the bill to address the many inconsistencies and ambiguities that have arisen in the forfeiture law. It also does not extend forfeiture into other areas of the law, such as white collar crime, terrorism,

or consumer fraud. If we are to consider any reform, let's not limit our consideration.

As to H.R. 1916, state and local law enforcement would not object to an amendment to the Federal Torts Claim Act, similar to that contained in Section 2, that would limit the law enforcement exception to tort liability. This would ensure that innocent property owners are afforded a remedy when their property is damaged in the course of a forfeiture action.

Similarly, we do not object to an extension of the time period for filing a challenge for a forfeiture, contained in Section 3. I do not know if the extension to 30 days is necessary, or if some shorter period would be adequate.

Of more concern is the changing of the burden of proof contained in Section 4. As drafted, the bill would shift the burden of proof to the government, and raise the standard of proof to "clear and convincing evidence." While law enforcement has been reluctant in the past to shift the burden to the government from the property owner after a showing of probable cause by the government, we can see how this change would make the entire process appear more fair. We are troubled, however, by the elevation of the standard, and would argue that the proper test should still be the "preponderance of the evidence."

Section S of H.R. 1916 would eliminate entirely the cost bond requirement. The cost bond requirement limits the number of challenges to the forfeiture and, thus, limits litigation. While we would be willing to consider a waiver of the bond for an indigent or poor owner, or a reduction of the bond by judicial discretion, elimination of the bond entirely does not seem to be necessary.

Section 6 of the bill would permit owners to retain possession of their property pending forfeiture, where deprivation of the property causes economic hardship without posting any bond. While this might be possible for real property that cannot be removed from a jurisdiction, we would want to be sure an owner was not able to diminish the value of such property, perhaps by use of a bond. Personal property creates a very different problem, because it can, in many instances, easily be physically removed from jurisdiction of the court hearing the forfeiture. In these instances, a bond would seem necessary.

Section 7, Appointing Legal Counsel for Indigents, would divert significant assets to the criminal defense bar. Traditionally, court-appointed (and paid for) counsel have only been used where a person's liberty is in jeopardy.

Finally, Section 8 clarifies the innocent owner defense for drug forfeiture cases only, by permitting a person who is aware that his or her property is being used to commit a crime, to defend against the forfeiture on the ground that he or she did not consent to the illegal use. I believe this would be acceptable as long as the owner did actually take reasonable steps to prevent the illegal use. The whole area of innocent owner defense should be reviewed to be sure all ambiguities are eliminated.

In summary, I repeat, H.R. 1916 is a good beginning for the reconsideration of the asset forfeiture laws, but it is just the beginning. Law enforcement would like other provisions included in any final reform proposal.

I would be happy to answer any questions. Thank you.

Mr. HYDE. Mr. Gekas.

Mr. GEKAS. I thank the Chair.

I direct this to Mr. Cassella of the Department of Justice. The previous panel had as one of the panelists Mr. Komie, who stated that or alleged that memoranda had been circulated setting forth quotas which establish minimum seizures to be made by Federal offices. In view of your testimony about how much money has been yielded over the years and how much has been shared with local authorities as a result of that, is there such a quota system that would lead to making sure that we reach half a billion dollars a year?

Mr. CASSELLA. Absolutely not. I don't know where Mr. Komie got that idea from. I have been working in this program since 1989. There is no quota system.

Mr. GEKAS. Had you ever heard that allegation before?

Mr. CASSELLA. In 1990, there was a memorandum sent asking law enforcement agencies to get their forfeitures in during that fiscal year so that budget expectations could be met. That was cited